Focus on Global South: Latin America, Sub-Saharan Africa, etc.
Low income Countries: More affected by aid, variance in impacts depending on income levels
source: World Bank
Foreign aid continues to be a primary tool of global engagement
Few studies fully integrate regime type, donor leverage, and transparency outcomes all together.
Can lead to more of an understanding in terms of how to fulfill donor goals in various regime types
Today:
Research Question
How does foreign aid affect corruption in varying regime types?
Camp One: more corruption in autocracies, minimal to no impact on democracies
– Kono et al., 2009
– Nieto-Matiz et. al. ,2020
Camp Two: Aid always causes corruption: regime type has no impact
– Knack, 2003
– Kaylvitis et al., 2012
– Bader et al., 201
Camp Three: Donor intent matters not regime type
– Bermeo, 2011
– Brown, 2005
Autocracies: Lack of voter base leads to uncontrolled growth in corruption
Democracies: Corruption increases, need to appease voter base decreases it
Figure A:
Sources: Transparency International: CPI, World Bank: Income Level and Percent GNI of ODA, V-Dem: Regime Classification
Approach: Differences in Differences:
\[ \text{CPI}_{it} = \sum_{k = -4}^{10} \beta_k \cdot \mathbb{1}(\text{EventTime}_{it} = k) + \alpha_i + \gamma_t + \varepsilon_{it} \]
\(\text{CPI}_{it}\): is the corruption score for country \(i\) in year \(t\),
\(\mathbb{1}(\text{EventTime}_{it} = k)\): indicator for each year relative to treatment. -\(\alpha_i\): Country fixed effects -\(\gamma_t\)-:year fixed effects are included to account for time-invariant country characteristics and common shocks.
Figure B:
sources:
Figure C:
sources:
Figure D: add figure D when you figure out how to fix the N/A thing
Figure A: two contrasting trends:
– Democracies: corruption decreases after an initial spike,
– Autocracies: corruption steadily worsens following the aid shock
Figure B: democracies have more of a lag: shows institutional checks, shows why corruption improvement in figure A is not immediate in democracies
Figure C:
– Autocracies: Aid goes in short term sectors,
– Democracies: Aid goes to government
Figure D: Protests in both
– Democracies: decrease in corruption
– Autocracies: corruption continues to increase
Difference-in-Differences event study assumes that treated and control countries would have followed similar paths in the absence of high ODA inflows
Excludes sub-national differences:
– Somaliland
CPI is a perception-based measure, which may lag behind actual corruption changes or be biased by media coverage and international scrutiny.
Ignores Conditionality
Future studies could look at:
– Sub-national variation
– Diffrent economic levels
– Donor type: Members of OPEC versus external sources i.e Chinao
Sajid: The Effect Of Foreign Aid on Corruption in Varying Regime Types